Global meltdown yet to unsettle Indian copper producing firms

MUMBAI: Indian copper producers like Sterlite Industries and Birla Copper say demand from local user companies hasn���t fallen much even though exports look slow. Scrap copper prices in India are quoting at an unusually higher rate than copper cathode, an intermediate, making the copper produced by these companies more attractive to users.

There is an acute shortage of scrap copper in India as China has imported huge amounts, say traders. China is preferring to import scrap as an import duty is levied on copper cathodes. ���With scrap actually priced higher than copper cathodes in India, manufacturers of electrical appliances and wires prefer to buy raw material from companies,��� said an agent for Sterlite Industries in Mumbai.

Industry officials, while confirming this, however, said that it was a temporary phenomenon. An executive from Sterlite said that copper scrap typically trades with a lag and since copper has fallen sharply in the last two months, scrap is costing more. ���Our domestic demand has remained steady, but the general downturn expected in production over the next few months is bound to catch up,��� he said.

India on an average, imports about 60,000 tonnes of copper scrap annually. The supplies have become tight as traders aren���t importing. Copper scrap is presently quoting at Rs 220 a kg.

An official from Birla Copper also said that demand was around the same as last year, and ���domestic consumption has not slowed down. With real estate in a bad shape and the overall slowdown in global economies, the demand is likely to fall,��� he added. But he did not indicate if there would be any production cuts.

Sterlite Industries produced about 3.4 lakh tonnes of copper cathodes last year, a notch below its total capacity of 4 lakh tonnes. Birla Copper has a capacity of 5 lakh tonnes.

According to industry estimates, copper consumption in India would not be more than 8% during this year, compared with a steady growth of over 15% in the past few years. This slowdown in consumption growth can continue with expected delays in commercial buildings, power projects and other large housing projects following the financial crisis.